Posted on Saturday, 2nd November 2024 by

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I receive many questions about MA options; few know what to expect or who pays for what. Hopefully, this article will answer many of your questions and provide insight into coverage issues that may arise in certain areas. Follow the links to learn more about subjects of interest.

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This article attempts to cover both the Federal Employee’s Health Benefit (FEHB) and the new Postal Service Health Benefit (PSHB) plans, interspersed with discussions about non-Federal Employee Plan (FEP) providers.

The Centers for Medicare & Medicaid Services (CMS) announced that “average premiums, benefits, and plan choices for Medicare Advantage (MA) and the Medicare Part D prescription drug program will remain stable in 2025.”

Next year’s plans are reducing prescription drug costs and delivering additional benefits, including an annual $2,000 cap on out-of-pocket drug costs.

Getting Started

Medicare Advantage (MA) Plans, also known as Medicare Part C, can provide significant savings. They may include Part B subsidies that increase monthly Social Security checks, offer lower prescription costs, gym memberships, and dental and vision care.

To join an MA plan, you must be enrolled in Medicare Parts A and B and pay the monthly Part B premium. About 51% of Medicare beneficiaries are enrolled in MA plans nationwide.

Note: Part B subsidies are frequently offered by MA plans. A $100 monthly subsidy increases your Social Security check by that amount for both you and your spouse if enrolled in a Family or Self Plus One plan.

When Federal Employees Health Benefits (FEHB) plan members are enrolled in Original Medicare, and the plan offers Part B reimbursements, you and your spouse must submit receipts showing you paid Part B premiums.

The insurer will send you a check for the reimbursement amount upon receipt of the proper documentation. This should also extend to those enrolled in one of the Postal Service Health Benefit (PSHB) plans. Check with your provider for the proper forms and procedures.

Who Pays for What?

Medicare Advantage (Part C) plans are available from insurance companies and funded by monthly premiums, beneficiary copayments, and the Centers for Medicare & Medicaid Services (CMS). Last year CMS spent approximately $454 billion on Medicare Advantage plans, over half of Medicare’s total spending.

Medicare pays more than $1,000 monthly to insurers for each Medicare Advantage enrollment, plus any bonus payments earned. Bonuses are rated from 1 to 5 stars, 5 stars being the highest that evaluates a plan’s chronic condition management, patient care, and member satisfaction. Bonuses of 5% for rankings of 4 to 5 stars allow those plans to offer additional benefits, including higher Part B subsidies.

MA (Part C) and Original (Part A & B) Medicare Defined

Part C plans offer comparable coverage to original Medicare (Part A and B). Extra perks such as dental and vision care and partial to full Part B base premium subsidies for some plans are included. These plans become your primary healthcare provider, and many refer to them as all-in-one plans.

When federal employees transfer to an MA plan, they must keep their FEHB/PSHB plan active and pay the monthly FEP premium as before. No additional premium is required for the Medicare Advantage plan.

CMS reports, “The average monthly plan premium for all Medicare Advantage (MA) plans, which includes MA plans with prescription drug coverage, is expected to decrease by $1.23 from $18.23 a month in 2024 to $17.00 in 2025. Approximately 60% of Medicare Advantage enrollees in their current plan will have a zero-dollar premium in 2025.

Caution: If you join an MA plan not associated with a Federal Employee Plan (FEP), suspend and don’t cancel your FEP plan. This way, you can return to the FEP plan of your choice next open season if the new private sector MA plan doesn’t work out well for you. Once canceled, you aren’t allowed to return to the FEP program.




Original Medicare

If you elect to stay with Original Medicare (Parts A & B), Medicare is the primary healthcare provider. Our FEP plans provide secondary healthcare coverage.

Medicare pays first, and our secondary plan picks up much of what Medicare doesn’t pay. This is why many suggest changing to a lower-cost FEHB or PSHB plan when enrolled in Original Medicare. Especially when you can use any provider or medical facility that accepts Medicare, regardless of whether or not they are in your FEP provider network.

PSHB Change: Certain Medicare-eligible Postal Service annuitants and their Medicare-eligible family members must enroll in Medicare Part B to keep PSHB coverage.

The requirement to sign up for Medicare Part B is limited to postal employees who retire on or after January 1, 2025, and if you are under 64, Certain exceptions apply.

There is currently no Medicare Part B enrollment requirement for those with FEHB coverage. An FEHB retiree with only Medicare Part A hospital coverage would remain covered by their FEHB plan for physician and outpatient care within their provider network and subject to the plan’s deductibles, copayments, and coinsurance for those services.

MA Plan Features and Comparisons

Medicare Advantage provides an alternative to Original Medicare for your health and prescription drug coverage. These “bundled” plans include Part A, B, and usually Part D. They provide the same level of services with expanded benefits by reducing costs, improving operating efficiency, and reviewing the medical necessity of tests and procedures ordered by your physician.

In most cases, you must use doctors and facilities within the plan’s network, and pre-approval may be required before the plan will cover certain medical procedures.

If you earn over a set amount, your Part B and D premiums will be increased by the Income Required Monthly Adjusted Amount (IRMAA). In 2024 Part B premiums range from $174.70 per month to a high of $594! Part D IRMAA premiums range from $0 dollars below a certain limit to a high of $81 per month. These premiums are deducted from your Social Security check if you are enrolled, or they bill you quarterly.

Note: Enrollees in MA plans offered by the Federal Employee Programs (FEPs) have the ability to cancel and revert back to Original Medicare at any time; they don’t have to wait until the next open season as long as they continue paying their monthly premiums.

I confirmed this with GEHA and Aetna. The FEP MA plans are “rolling enrollments.” If you cancel before the first of the upcoming month, the change back to Original Medicare will take place, in most cases, by the first of the next month.

Clarification: This rollback may not apply to MA plans offered by the private sector. One of our subscribers suggested I mention that her sister had a difficult time canceling her Advantage Plan after signing up.

She was assured that nothing would change when moving to their Advantage program. However, her medications and co-pays changed dramatically. She helped her sister file the proper paperwork to return her to the coverage she had previously within the very limited time the company allowed to effect the change.

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Original Medicare

Those who retain Original Medicare don’t generally require preapproval to see specialists or have tests and procedures completed. Our FEHB and PSHB plans pick up most copayments, coinsurance, and deductibles. You can also see any doctor or specialist that accepts Medicare.

Original Medicare members who retain their FEHB and PSHB prescription drug coverage aren’t enrolled in Part D and, therefore, not subject to a Part D (IRMAA). Many Federal Employee Programs (FEPs) now offer Medicare Prescription Drug Plan (MPDP) Part D options.

If you decide to stay with your FEP plan’s standard prescription drug plan, you must opt out of the MPDP option when first offered. If you accept the MPDP option, you won’t be charged a late Part D enrollment penalty; however, you must pay an IRMAA if your income warrants it.

According to several of our subscribers, the MPDP opt-out process is daunting and lacks clarity.

John, a blog visitor, suggested that FEP plans need to improve the opt-out form. The letter he sent his provider outlined his many issues with their current form and the general lack of detailed instructions and guidance. He had to make numerous calls to customer support to opt out of their MPDP plan.

Comparing 2024 and the Upcoming 2025 Plans

Explore each plan carefully to ensure they cover what you need at a cost you can afford. Use OPM’s Online Comparison Tool and Checkbook’s Guide to Healthcare Plans to identify the best plan for you and yours.

Pre-order Checkbook’s 2025 Guide to Healthcare Plans for Federal Employees and save 20% by entering promo code FEDRETIRE at checkout. Their Guide and OPM’s comparison tool will be available on the first day of the open season; before ordering, check here to see if your agency provides free access.

The Postal Service is providing Consumers’ Checkbook Comparison Tools at no cost this year for the new PSHB offerings:

  • Active USPS employees should go to Liteblue.usps.gov to use the comparison tool.
  • Retired USPS employees can find Checkbook’s Comparison Tool on their KeepingPosted website.

For retirees, Checkbook’s Guide provides a yearly cost estimate for every FEHB plan with Medicare Part A only and a separate estimate with Medicare Parts A and B.

This allows users to see how each plan coordinates with Medicare, the cost reduction of adding Medicare Part B, and whether the plan offers Medicare Part B premium rebates. They also review FEHB Medicare Advantage plan options which can be less expensive for many retirees.

Things to Consider

One of the major differences between Original Medicare and MA Part C plans is who manages them; MA plans are operated by companies like Aetna and GEHA, while CMS manages Original Medicare plans.

MA plans offer generous incentives to entice individuals to move to their plans, including Part B incentives, low to zero additional cost over what you pay for Medicare Part B, some vision and dental care, and other benefits. Doing your due diligence before changing to any of the MA plans is highly recommended.

Once enrolled in an MA plan, your carrier will send you a new medical identification card. Don’t discard your red, white, and blue Medicare Card. You will need it if you decide to return to Original Medicare at a later date. Keep it in a safe place.

Statistics

Hospitals and practitioners are opting out of MA plans nationwide in certain areas. The Center for Medicare Advocacy reported that 19% of health systems discontinued accepting MA plans, and others are considering doing the same.

The Kiplinger Retirement Report states, “Increasingly frustrated health systems are opting out of contracts with different Medicare Advantage insurers.”  They go on to state, “Among the most commonly cited reasons are excessive prior authorization denial rates and slow payments from insurers.”

Some MA plans deny care approval at more than twice the rate of others, causing health systems to cancel their MA contracts. These plans often negotiate lower reimbursement rates than CMS has for Original Medicare.

These plans also add additional administrative paperwork for providers, a perceived pressure to avoid costly treatments, and there may be an insufficient number of patients in the area to make it economically feasible for providers to participate.

There are potential shortcomings, especially for those with health issues that may require pre-approvals for tests and medical procedures.

Caution

Before moving to an MA Part C plan, review all of the literature provided and check with your providers and medical facilities to confirm they are in their network. Review each plan’s prescription drug tiers and confirm your most used drugs are included at a price you can afford.

Note: Don’t risk losing your right to return to your FEHB/PSHB coverage if you sign up for a private Medicare Supplement Plan or an MA plan not affiliated with the FEHB/PSHB program.

Yes, there is much to consider this open season. Section 9 of the FEHB/PSHB benefit guides includes comprehensive guidance on how your plan works with Medicare.

Please take your time to access each plan of interest to ensure they will be a good fit for you and yours.

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Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, investment, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center.

Over time, various dynamic economic factors relied upon as a basis for this article may change. The information contained herein should not be considered investment advice and may not be suitable for your situation. This service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION, WELLNESS / HEALTH | Comments (2)


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2 Responses to “Medicare Advantage Plan Primer – What You Need to Know”

  1. Paul Ries Says:
    November 9th, 2024 at 11:49 am

    I really appreciate your newsletter, and this primer on Medicare Advantage programs is an excellent summary. One item of note… I have been in MA programs under FEHB since they were first introduced. I was first with United Healthcare, then switched to Aetna a few years ago for a larger Medicare reimbursement. I have never had to keep receipts showing I paid Part B Premiums in order to receive a check. Both insurers paid my reimbursement directly to Medicare, and the amount has been automatically deducted from the Medicare Part B Premium withheld from my annuity. The process has been simple and efficient.

  2. Dennis Damp Says:
    November 9th, 2024 at 4:20 pm

    The Medicare Advantage Plans don’t require receipts to prove you paid your Part B premiums, the system works as you describe. The only time you have to provide proof that you paid Part B premiums is if you are enrolled in an FEHB plan that offers a Part B reimbursement. These are not MA plans and you must provide proof that you paid Part B premiums to get their stated reimbursement. Reimbursements don’t reduce your monthly Part B Premiums like MA Part B subsidies do.